Wall Street wavers between defensive rebound and doubts over tech valuation
On Tuesday, November 11, US markets experienced a mixed session, indicating a significant repositioning of portfolios. While the Dow Jones gained 1.18% and the S&P 500 increased modestly by 0.21%, these indices masked a highly divided dynamic. The healthcare sector led the way with spectacular gains, while technology stocks, particularly those related to artificial intelligence, underwent a significant correction. This movement comes after several days of concern over excessive valuations in the tech sector and the announcement of SoftBank's massive divestment in Nvidia. The impending end of the government shutdown was expected to boost the entire market, but structural concerns prevailed.
Healthcare Takes the Lead: A Strategic Shift Towards Safe Investments
The pharmaceutical and medical sectors dominated trading with remarkable performances. Viatris soared by 10.13%, Moderna increased by 6.66%, while Dexcom grew by 6.00%. Merck & Co., Pfizer, and Amgen rounded out the winners' podium with gains of 4.84%, 4.59%, and 4.57%, respectively. Becton Dickinson and several other healthcare leaders also benefited from this movement. This shift towards defensive stocks in the medical sector reflects investors’ awareness of the relative fragility in the valuation multiples of the tech sector. Share buybacks and dividend announcements, particularly at Amgen, supported these stocks. The gloomy macroeconomic context, marked by declining consumer sentiment and concerns about US growth, also explains the preference for companies offering stability, returns, and exposure to less cyclical sectors. The healthcare sector, long overlooked in 2024 and early 2025, is gradually regaining favor among managers.
The Downfall of Semiconductors and AI-Related Stocks
The downside became evident in the technology sector. Nvidia dropped 2.96%, weighed down by SoftBank's sale of $5.8 billion in shares and disappointment over revenue forecasts from CoreWeave, a major client in AI infrastructure. Advanced Micro Devices fell 2.65%, while heavy equipment manufacturers like Applied Materials, Lam Research, and Teradyne lost 2.73%, 4.32%, and 3.72%, respectively. Micron Technology experienced a decline of 4.81%. This pullback reflects a growing investor awareness of potentially excessive valuations in this segment. Doubts about the actual return on investment from massive spending in AI infrastructure, intensified by warnings from Wall Street CEOs about an anticipated 10 to 15% correction, led to profit-taking. Additionally, concerns over the supply chain and potential economic slowdowns that could reduce orders for tech equipment also played a part.
Dull indices masking a deep restructuring
The general indices, while positive, mask significant underlying volatility. The Dow Jones, less exposed to mega-cap technology stocks than the Nasdaq, has shown greater resilience. The S&P 500, nearly flat at +0.21%, reflects a divided market. This contrasting picture emerges as the US economy shows signs of slowing down: consumer sentiment deteriorated in November to its lowest since 2022, employment data reveal increasing tensions, and inflation remains stubbornly above 3%. The announced end of the government shutdown could release long-stalled economic data, hence the heightened interest in defensive sectors. Investors are clearly transitioning, gradually moving away from a concentrated focus on the seven major tech giants to embrace more traditional diversification. This reshuffling remains fragile: a rebound in risk appetite could easily reverse these dynamics.
This content has been automatically translated using artificial intelligence. While we strive for accuracy, some nuances may differ from the original French version.
